European flags in downtown Luxembourg, October 23, 2008 – Dominique Faget AFP
Seven years after the LuxLeaks revelations, Luxembourg is once again pinned down for its tax practices allowing fortunes around the world to escape tax. Some 140,000 active companies, or one for every four inhabitants, have been identified in Luxembourg in a vast survey published by the French daily The world with 16 partner media including Le Soir (Belgium) and Süddeutsche Zeitung (Germany).
Journalists sifted through 4 million documents. Nine out of ten companies registered in the Grand Duchy are owned by non-residents, one in three companies is a participation or holding company in which assets are housed, a priori to benefit from a favorable tax regime, according to this radiography of the Luxembourg tax system, called OpenLux.
Offshore companies
Over the 2018-2019 financial year, according to their calculations, 6.500 billion euros of assets were placed in Luxembourg in these offshore companies, i.e. more than 100 times the 2019 GDP of this country of 600,000 inhabitants, the third largest financial center in the world. ‘Europe after London and Zurich.
“These ghost companies without offices or employees were created by billionaires, multinationals, sportsmen, artists, high-ranking politicians and even royal families”, affirms The world. “In an area of 2,586 km2, Tiger Woods and the Hermès family rub shoulders with Shakira and the Crown Prince of Saudi Arabia. Hundreds of multinationals (LVMH, Kering, KFC, Amazon…) have opened financial subsidiaries there ”.
“OpenLux reveals that dubious funds, suspected of coming from criminal activities or linked to criminals targeted by judicial inquiries, have been concealed in Luxembourg. This is the case of companies linked to the Italian Mafia, the Ndrangheta, and to the Russian underworld, ”says the French daily. In 2014, an investigation (LuxLeaks) had already revealed attractive tax agreements granted by Luxembourg to hundreds of companies.
This time, OpenLux is taking advantage of a directive passed by the European Union in 2018, which required the creation of public registers of the real owners of companies in all member states.
“Fiscal indecency”
The brand new register of the beneficial owners of companies registered in the Grand Duchy serves as the basis for the new survey. But according to OpenLux, around a third of company accounts could not be recovered, most often because they had not been published, and only half of company beneficiaries could be identified.
The government of Luxembourg reacted to these publications by affirming that the country “fully respects all European and international regulations in terms of taxation and transparency, and applies all community and international measures in terms of information exchange to fight against tax abuse and evasion ”. The OECD and the European Union “have not yet identified any harmful tax practice in Luxembourg”, he adds in his press release.
In Brussels, the European Commission indicated to take note of this investigation made by the press. “These investigations are obviously important pieces of information that push for changes by exposing the flaws that may exist in the system.”
“Six years after Luxeaks, nothing has changed”
Elected officials and NGOs have nevertheless denounced the inaction of the authorities. “Disgusted by the fiscal indecency which still reigns in Europe, despite the repeated scandals! Of course, it is the transparency imposed by the EU that allowed the OpenLux revelations. But that’s not enough: we have to regulate, ”said environmentalist MEP Damien Carême on Twitter. “Six years after Luxeaks, nothing has changed. And for good reason, the EU refuses to list Luxembourg as a tax haven ”, denounced Manon Aubry, MEP France rebellious.
OpenLux “shows how big companies and billionaires take advantage of tax havens to evade taxes. The real scandal is that this is happening in Europe ”, reacted the NGO Oxfam.
